Pensions

When examining the puzzle of Connecticut’s fiscal challenges, a critical piece to look at is the State’s significant pension liabilities.

Pensions, regular payments made to retirees from a designated fund, are a key benefit for Connecticut state employees and public school teachers. However, for a number of reasons, Connecticut’s two largest state pension systems — the State Employees Retirement System (SERS) and the Teachers’ Retirement System (TRS) — have tens of billions of dollars in unfunded liabilities.

In order make good on its promises to retirees and current employees, and make up for decades of inadequate saving and recent below average investment returns, the State has had to increase its contributions to SERS and TRS substantially in recent years, and will continue to have to do so for years to come. Since fiscal year 2000, the State's contributions to SERS and TRS have increased by $823 million (273 percent) and $722 million (249 percent), respectively. The State’s contributions to the two pension systems are set to peak in 2024 for SERS (with a $2.218 billion contribution) and in 2031 for TRS (with a $1.71 billion contribution).

As the State is required to spend more to fulfill its pension obligations over the next decade, fewer and fewer dollars will be available to spend on non-fixed costs, such as education, human services, or transportation — unless revenues increase.

More information about SERS and TRS can be found in the pages that follow.

State of Connecticut, Office of Policy and Management. (2017). 2017 SEBAC Agreement. Hartford, CT: Author. Available from http://ctstatefinance.org/assets/uploads/files/SEBAC-2017-Projections-Report.pdf.

Lembo, K. (2017). Annual Report of the State Comptroller, FY 2017. Hartford, CT: State of Connecticut, Office of the State Comptroller. Retrieved from http://www.osc.ct.gov/reports/annual/2017/Budgetary2017.pdf.

Visualization Citations

U.S. Census Bureau. (2017). 2016 Survey of Public Pensions: State & Local Data [Summary Data file]. Available from https://www2.census.gov/govs/retire/2016ASPPSummary.xlsx.

Resources

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